Lai v Johnston

Case •

[2017] WADC 122

•

13 SEPTEMBER 2017

JURISDICTION     :   DISTRICT COURT OF WESTERN AUSTRALIA

IN CIVIL

LOCATION:   PERTH

CITATION:   LAI -v- JOHNSTON [2017] WADC 122

CORAM:   DEPUTY REGISTRAR KUBACZ

HEARD:   17 AUGUST 2017

DELIVERED          :   13 SEPTEMBER 2017

FILE NO/S:   CIV 601 of 2017

BETWEEN:   KAM KING LAI

Plaintiff

AND

KURT DONOVAN JOHNSTON
First Defendant

AND

MARCELLE JUNE JOHNSTON
Second Defendant

Catchwords:

Practice and procedure - Contract - Plaintiff's summary judgment application against the first defendant - Turns on its own facts

Legislation:

Nil

Result:

Application for summary judgment against the first defendant allowed

Representation:

Counsel:

Plaintiff:     Mr C Williams

First Defendant              :     In Person

Second Defendant         :     In person

Solicitors:

Plaintiff:     Solomon Brothers

First Defendant              :     Not applicable

Second Defendant         :     Not applicable

Case(s) referred to in judgment(s):

Ansearch Ltd v Wavtech Pty Ltd [2006] WASC 184

Cordinup Resorts Pty Ltd v Terana Holdings Pty Ltd (1997) 143 FLR 18

Crescendo Management Pty Ltd v Westpac Banking Corporation (1988) 19 NSWLR 40

Deputy Commissioner of Taxation v Roget [2014] WADC 25

Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87

Moscow Narodny Bank Ltd v Mosbert Finance (Aust) Pty Ltd [1976] WAR 109

Quantum Asset Management Pty Ltd v Love Properties (WA) Pty Ltd [2017] WASC 167

Walsh v Doyle [2015] WASC 96

Webster v Lampard [1993] HCA 57; (1993) 177 CLR 598

  1. DEPUTY REGISTRAR KUBACZ:  This is the plaintiff's application for summary judgment against the first defendant filed on 25 May 2017.  The plaintiff obtained a default judgment against the second defendant on 26 June 2017.  In support of his application against the first defendant, the plaintiff has filed three affidavits.  Two being the affidavits of Kam King Lai dated 23 May 2017 and 28 July 2017.  The third being the affidavit of Zubayr Adnaan Abrahams dated 16 August 2017.

  2. The first defendant is self‑represented.  He filed an affidavit in opposition on 1 July 2017 and 16 August 2017.

  3. The matter came before me on 17 August 2017 for hearing.  It was clear at the hearing that the first defendant had certain documentation upon which he sought to rely which was not before the court.  I therefore gave him leave to file a further affidavit, which he did and which is dated 18 August 2017.

  4. Despite orders being made for the parties to file and serve submission prior to the hearing, the first defendant did not file any written submission and was content to rely on his oral argument.

  5. The plaintiff filed submissions on 28 July 2017.  I also gave the plaintiff leave to file some short submissions dealing with matters arising from the first defendant's affidavit of 18 August 2017, which were filed on 24 August 2017.

Should the plaintiff be granted leave to make its application for summary judgment out of time

  1. The plaintiff's summary judgement application was filed 23 days outside of time limits prescribed by O 14 r 1(1) of the Rules of the Supreme Court 1971 (RSC).

  2. The delay is explained in the affidavit of Kam King Lai dated 23 May 2017 and is on the basis that the first defendant had filed but not served his memorandum of appearance to the action on 14 March 2017 and his solicitors only obtained a copy of the appearance on 15 March 2017 from an inspection of the file at the court registry.

  3. Similarly, the first defendant's defence was not served on the plaintiff and a copy was obtained from an inspection of the court file on 23 March 2017.

  4. Following this the plaintiff deposes that he was then waiting on written advice from his solicitors before deciding whether to instruct them to make the application.

  5. There are no firm rules as to when an extension ought be granted as this is a matter for the court's discretion upon a consideration of all the circumstances of the case.  Central to the exercise of that discretion is whether there has been a prejudice to the defendant occasioned by the delay.

  6. Given that the appearance and the defence were not served on the plaintiff, that the application for summary judgment was made only 23 days out of time and that the first defendant did not raise any prejudice due to the delay in his oral submissions, I consider it appropriate to grant leave to the plaintiff to make the application out of time.

Summary judgment principles

  1. The principles of when a court should allow an application for summary judgment are well established and have recently been summarized in this court in Deputy Commissioner of Taxation v Roget [2014] WADC 25 (Davis DCJ) and most recently by the Supreme Court in the matter of Quantum Asset Management Pty Ltd v Love Properties (WA) Pty Ltd [2017] WASC 167 [79] and [80] (Banks-Smith J).

  2. I do not propose to outline the principles in any great detail apart from to mention the salient principles.

  3. First, that the power to order summary judgment should be exercised with great care and should never be exercised unless it is clear that there is no real question to be tried (Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87, 99).

  4. Second, that the defendant must show by affidavit or otherwise that there is some triable issue either of fact or law, and that he has an arguable defence or a defence on the merits (Moscow Narodny Bank Ltd v Mosbert Finance (Aust) Pty Ltd [1976] WAR 109, 110 ‑ 111).

  5. Third, if after argument, there remains a real uncertainty about the plaintiff's right to judgment without further investigation of the facts, summary judgment must be refused (Ansearch Ltd v Wavtech Pty Ltd [2006] WASC 184, [28]).

The Facts

  1. The plaintiff filed his statement of claim on 1 March 2017.  In it he alleges that on or about 24 October 2010, which whilst not expressly pleaded it is apparent is based on affidavit evidence, he advanced a sum of $141,000 to the first defendant (the Loan).

  2. Subsequent to advancing the first defendant the $141,000 (Principal Sum), on 24 November 2010, the plaintiff and the first and second defendants entered into a written agreement (the Agreement) confirming the terms of the Loan, and again which whilst not expressly pleaded it is apparent from the first paragraph of the Agreement that it was in past consideration of the Loan already advanced to the first defendant.

  3. The statement of claim outlines at par 3 the material terms of the Agreement which express terms included that the Principal Sum was to be repaid by weekly instalments of $2,000 for 17 months from 24 October 2010 and that the balance of the Principal Sum was to be paid on or by 23 March 2012.  If the Principal Sum was not repaid by 23 March 2012 the interest on the unpaid money accrued at a rate of 19.4% per annum compounding daily and that an administration fee of $100 per day was also payable.  A copy of the Agreement evidencing the terms of the Loan was annexed to the Affidavit of Kam King Lai dated 23 May 2017 at 'KKL-1'.

  4. The plaintiff further alleges at pars 4 ‑ 8 of the statement of claim that:

    (a)between 24 October 2010 and 23 March 2012, the first defendant paid a total of $22,102 in repayments of the Loan (par 4);

    (b)in breach of the Agreement the first defendant failed to repay the balance of the Principal Sum by 23 March 2012 or thereafter (par 5), any Interest thereon (par 6) or the Fees (par 7); and

    (c)the first defendant therefore remains indebted to the plaintiff in an amount of $425,524.70 (refer to the particulars at par 8 of the statement of claim) together with ongoing Interest at 19.4% per annum compounding monthly and Fees of $100 per day.

  5. The plaintiff's statement of claim makes alternative claims, but for the purpose of this application they are not required to be determined.

  6. The first defendant filed an appearance on 11 March 2017 and a defence on 22 March 2017.  The defence is unfinished and is to say the least, confusing in its entirety.

  7. Materially at par 1 of the defence the first defendant admits the plaintiff's allegations that the first defendant was advanced a sum of $141,000 on 24 October 2010 and that on 24 November 2010, the written Agreement was executed.

  8. Paradoxically at par 2 of the defence the first defendant denies that the advance of $141,000 constituted a loan from the plaintiff to the first defendant, however gives no further particulars nor does he deny the balance of par 3 of the statement of claim (being the terms of the Agreement, repayments made or being in default).

  9. At par 3 of the defence the first defendant then alleges that in October 2010, the plaintiff was acting as the accountant for the first defendant's company Sign Enterprises Pty Ltd and that the plaintiff failed to act in a professional matter causing financial hardship to Sign Enterprises Pty Ltd.  No defence or counterclaim is asserted by such matters, although the first defendant then alleges at par 4 that as a result of a verbal agreement made in a conversation on 18 October 2010, the plaintiff agreed to borrow $100,000 to assist to keep the Company open and that the money would be used to pay off a debt to the Australian Taxation Office (ATO).  The principal sum was $93,700 (which I assume by virtue of the balance of the defence is a typographical error and is meant to be $97,300) and a fee of $2,700 was kept by the plaintiff.

  10. At par 5 of the defence the first defendant admits that on 24 October 2010 the plaintiff advanced to the first defendant the sum of $97,300, the first defendant makes no other admissions or denials (including relevantly to deny that any moneys remain due and payable by the first defendant).

Determination

  1. The plaintiff's claim is simple.  He advanced the first defendant a sum of $141,000 on 24 October 2010, the terms of which were evidenced by the Agreement on 24 November 2010.  The first defendant failed to repay the $141,000 and is therefore in default of the Agreement.

  2. The first defendant admits entering into the Agreement and that the sum of $141,000 was advanced to him on 24 October 2010.  These facts are also proved by pars 4 and 5 of and Annexure 'KKL-1' to the Affidavit of Kam King Lai dated 23 May 2017.

  3. Notwithstanding the admission, the first defendant then contends that he was only advanced $97,300 comprising a $100,000 loan less a fee of $2,700.  This is evidenced in the Affidavit of Kurt Johnston dated 1 July 2017 at par 3.

  4. Whatever sum was advanced, there is no dispute by the first defendant that the loan has not been paid in full.

  5. It is therefore clear that the plaintiff has made out a prima facie case.  It is therefore for the first defendant to put before the court some material that demonstrates a triable issue either of fact or law, and that he has an arguable defence or a defence on the merits: Moscow Narodny Bank Ltd v Mosbert Finance (Aust) Pty Ltd (110 – 111); Cordinup Resorts Pty Ltd v Terana Holdings Pty Ltd (1997) 143 FLR 18, 23 (Murray J).

  6. I will deal with each of the first defendant's contentions below.

Company Accountant/Client Relationship

  1. At the material time, the first defendant was a director of Sign Enterprises Pty Ltd (the Company).

  2. At par 3 of his defence and at pars 3 and 4 of the Affidavit of Kurt Johnston dated 1 July 2017 the first defendant deposes that the plaintiff 'was acting as the company accountant' and lent money to the first defendant to assist the Company in paying a taxation liability to the ATO.

  3. The defence further pleads that the plaintiff failed to act in a professional matter causing financial hardship to the Company (par 3).  This is evidenced further in the Affidavit from Kurt Donovan Johnston dated 16 August 2017 at par C where it is deposed that the cause of the debt was due to the plaintiff acting as an accountant for the Company and not providing correct and professional advice, but no particulars are provided.

  4. At par 4 the Affidavit of Kurt Johnston dated 1 July 2017, the first defendant deposes that the money was offered to him from the plaintiff following a court hearing with the ATO and in order to pay the amount due to the ATO.  The action came about because the plaintiff and a Mr Danny Chan had not complied with the request of the ATO and had failed to inform him of what had occurred.

  5. The plaintiff relies on the Affidavit of Kam King Lai dated 28 July 2017 which annexes documentary evidence to prove that the plaintiff was not the Company accountant (Annexures KKL-2 and KKL-3).

  6. It is well known that a court will generally accept evidence given on affidavit by a respondent to a summary judgment application unless it is inherently incredible: Webster v Lampard [1993] HCA 57; (1993) 177 CLR 598, 602 ‑ 603. Given the documentary evidence annexed to the Affidavit of Kam King Lai dated 28 July 2017, I find that it is inherently incredible that the plaintiff was or could have been the Company accountant at the time the loan was made and therefore this does not provide an arguable defence to the non-payment of the monies owed.

  7. If I am wrong in this conclusion, I agree with the plaintiff's submissions that the first defendant's assertions relating to the accountant/client relationship provide no arguable defence to the claim.  First, the relationship between an accountant and client is not a standard fiduciary one and something more is needed before any fiduciary duties are owed in this situation.  The first defendant had provided no evidence that points to the existence of a fiduciary relationship or any material basis upon which it is alleged the plaintiff breached any alleged professional obligations.

  8. Second, any harm suffered by any conduct of the plaintiff in relation to any purported accountant relationship with the Company is the Company's claim not the first defendant's.

  9. Third, there is no evidence of the actual harm alleged to have been suffered by the first defendant by the conduct of the plaintiff.

  10. The assertions of the first defendant are so vague and lacking in substance that they provide no answer to the summary judgment application: Walsh v Doyle [2015] WASC 96, [7].

Duress

  1. The first defendant deposes that the loan was made under duress in order to save the Company (Affidavit of Kurt Johnston dated 1 July 2017 par 5).  The law on duress is clear.  The proper approach in determining whether there has been duress is to ask whether any applied pressure induced the victim to enter the contract and whether that pressure went beyond what the law is prepared to countenance as legitimate: Crescendo Management Pty Ltd v Westpac Banking Corporation (1988) 19 NSWLR 40, 46.

  2. There is no evidence that the plaintiff applied any pressure that induced the first defendant to enter into the Loan Agreement.  Without such evidence, there can be no finding by the court that the first defendant signed the Agreement under duress.

  3. There is therefore no substance to the first defendant's allegation to provide an answer to the summary judgment application.

Licenced Credit Provider

  1. During oral submissions, the first defendant submitted that the plaintiff was not a licenced credit provider and therefore should not have provided the loan to him, or provided the loan unlawfully.

  2. In support of this, the first defendant deposed in the Affidavit from Kurt Donovan Johnston dated 16 August 2017 that the plaintiff was not registered with Australian Securities and Investments Commission (ASIC) with the appropriate licence to provide credit in Australia (par A), that the plaintiff did not conduct responsible lending practices (par D).

  3. By way of further evidence, the first defendant annexed a document from ASIC titled 'borrowing money' to the Affidavit from Kurt Donovan Johnston dated 18 August 2017.

  4. The requirement for a credit licence is imposed by s 29(1) of the National Consumer Credit Protection Act 2009 (Cth) (NCCP). This section of the NCCP has only been in operation since on or after 1 July 2011 and was not in operation when the Agreement was entered into.

  5. Prior to the introduction of the NCCP, consumer credit in Western Australia was governed by the Consumer Credit (Western Australia) Act 1996. Pursuant to s 5(1)(b), the Consumer Credit (Western Australia) Act imposed no licencing requirements and applied solely to credit provided wholly or predominantly for personal, domestic or household purposes.  Given that the loan in this case was to pay the Company's taxation debt, the loan was not for personal, domestic or household purposes, the first defendant has failed to raise an arguable defence on this ground.

The Letters

  1. As previously mentioned, the first defendant attempted to hand up two documents from the bar table which I subsequently allowed him to attach to an affidavit and allowed the plaintiff to respond via brief submissions.

  2. The letters are attached to the Affidavit from Kurt Donovan Johnston dated 18 August 2017 and purport to dispute that email correspondence attached to the Affidavit of Kam King Lai dated 28 July 2017 at 'KKL-4' related to the loan the subject of this action.

  3. I must say, I am a little confused as to the relevance of the letters contained in both the plaintiff's and first defendant's affidavits.

  4. The correspondence attached to the Affidavit of Kam King Lai dated 28 July 2017 at 'KKL-4' is dated 13 and 14 April 2010 respectively and discloses a conversation about a potential loan for $100,000 for Sign Enterprises.

  5. The letters attached to the Affidavit from Kurt Donovan Johnston dated 18 August 2017 are undated and contain evidence of two loans being advanced to the first defendant from a Mr Ping L Lai.  The first loan was entered into on 14 March 2010 in the amount of $53,688 and the second loan entered into on 16 May 2010 in the amount of $50,990.  The letter further states that both loans have been deemed repaid.

  6. It is undisputed that this loan was entered into on 24 November 2010, with the monies being advanced prior to this on 24 October 2010.

  7. If there is any relevance to the letters it has not been articulated to me either in the affidavit material or in oral argument, and it appears to me inherently unlikely that the letters attached to any of the affidavits above demonstrate anything other than that loans between the first defendant and Mr Ping L Lai, not the plaintiff and first defendant, have been made in the past and agreed to have been repaid.

  8. I therefore fail to see the significance to these letters in the factual matrix of this application and they neither assist the plaintiff in proving his case or the first defendant in raising a defence on the merits.

Threats

  1. The first defendant also states in his affidavit of 18 August 2017 that the letters proved that the fist defendant was being threatened (Affidavit from Kurt Donovan Johnston dated 18 August 2017 par E).  I can in no way see how these letters were at all threatening.  All they are doing is purporting to discharge two loans.

  2. This does not raise a defence.

Conclusion

  1. In consideration of all of the evidence before me, it is my opinion that the first defendant and the plaintiff entered into a loan for an amount of $141,000 on 24 November 2010 as evidenced by the Affidavit of Kam King Lai dated 23 May 2017 Annexure 'KKL-1' and the positive admission in the first defendant's defence.  The first defendant has provided no real or cogent evidence to show that the loan was for any other amount on or any different terms.  By his own admission in oral submissions, the first defendant has not repaid the loan.

  2. Based on the material before me, it is clear that there is no real question to be tried (Fancourt v Mercantile Credits Ltd (99)) and that the defendant has failed to show by affidavit or otherwise that there is some triable issue either of fact or law, and that he has an arguable defence or a defence on the merits (Moscow Narodny Bank Ltd v Mosbert Finance (Aust) Pty Ltd (110 – 111)).

  3. I therefore find for the plaintiff and make the following orders:

    1.Leave be granted for the plaintiff to bring this application out of time.

    2.Judgment be entered for the plaintiff against the first defendant in the amount of $425,524.70.

    3.The first defendant pay the plaintiff interest at the rate of 19.4% per annum compounded daily on such amount from the date of commencement of the action until judgment, and thereafter at the rate of 6% per annum pursuant to s 32 of the Supreme Court Act 1935.

    4.The first defendant pay the plaintiff's costs of the action, including the plaintiff's costs of the summary judgment application, to be taxed if not agreed.

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